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Intellectual Property Law

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Wednesday, December 19, 2012

Supreme Court to hear case involving reverse payment settlement in generic drug case

The Supreme Court has agreed to hear the case of Federal Trade Commission v. Watson Pharmaceuticals, et. al. (11th Cir.). This case involves the issue of “reverse payment” settlement agreements. In these types of agreements, a generic drug company agrees to drop its challenge to a brand drug company’s patent and refrain from entering the market for a specified period of time in exchange for a payment by the brand drug company to the generic drug company.

There is a split in several circuits with respect to the legality of reverse payment agreements. For example, the Third Circuit has found that “reverse payments” are prima facie evidence of an unreasonable restraint of trade, which may result in a violation of the antitrust laws. The Federal Circuit, however, has found that such agreements are valid if they do not extend beyond the exclusionary scope of the patent.

The Supreme Court decision is expected by the end of June 2013.  Until then, parties should continue to be cautious about entering into such agreements and should consider the circuit split when doing so.
11:20 am cst 

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